Nearly 70% of Americans say cutting the deficit is an important goal for 2012, with 84% Republicans, 66% Democrats, and 64% Independents rating it as their top priority.

These folks are happy to slash spending and raise taxes — only theoretically. Asked about specific programs, wide majorities almost always favor either increasing spending or maintaining the current level, as the following chart from Pew shows:

On education, for instance, 62 percent favor increases and 25 percent favor maintaining the current level. More than 90 percent favor either an increased level or the current level of spending on veteran’s benefits; and more than 80 percent favor increasing levels or maintaining the current level on college financial aid, public school spending, Medicare, and Social Security. The only program that even gains a plurality of support for reduced spending levels is aid to the world’s needy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

54 Responses to “Americans Support Cutting The Deficit, But Not Cutting Specific Programs”

It would be interesting to add to each category what percentage of the federal budget it comprises. The closest we get to a majority on cutting is in foreign aid to the needy, and it cannot amount to 1% of the discretionary budget, can it?

Stretch the time-frame out about a decade with a truckload of spending for the first two to help households deleverage with normalization of spending following and deficit reduction taking priority in the latter half and you might actually have a plan that works, at least the IMF thinks so:

The IMF Goes All-Out on Balance-Sheet Recessions, Providing Sanity on Economic Policy by Mike Konzcal (ht Brad DeLong)
1. A run-up in household debt and leverage explains the economic collapse across countries.
2. Financial crises are not a driver of prolongued recessions. If anything they are a symptom.
3. HAMP is a failed program.
4. [Mass] foreclosures can be a [macroeconomic] problem [government must get involved to lower cost of restructuring debt and prevent abuses].
5. Institute demand-side stimulus. Across the board. Now.

That’s actually an amazing set of polices. When can we start? And can we get the IMF advising US economic policy if this is what they are suggesting?

Yes, it would appear that after every other explanation and dodge has been trotted out and reduced to ashes by events in the real world the hard lessons learned during the Great Depression are finally being recalled to mind; e.g., IMF Cuts U.S. Growth Forecast, Cites Smaller Gov’t (Forbes).

Other than that, an exceptional (and safe) 4th of July to all. Presidents John Adams, Thomas Jefferson, and James Monroe all died on this day but I’ve been thinking more of Adams lately: “To be good, and to do good, is all we have to do.”

The American public vastly overestimates the percentage of US foreign aid.

“In the current poll estimates of foreign aid vary by education, growing more accurate with higher levels of education. Among those with less than a high school education the median estimate was that foreign aid represented an extraordinary 45 percent of the budget, those with only a high school diploma 25 percent, those with some college at 20 percent. However, even those with a college degree or higher still overestimate by a wide margin, with a median estimate of 15 percent of the budget.”

A better survey would be to ask what percentage of the unified Federal budget should be spent on those various items. If the totals come to more than a 100%, then ask if they would be willing to be taxed to cover the difference – if not, go back and redo their numbers.

I strongly suspect, and some polls I’ve seen support my suspicion that few Americans really know what constitutes, in percentages, the Federal budget. For example, the amount spent on Foreign aid is usually greatly overestimated.

One of the best educational tools that could be very easy implemented would be when Americans fill their tax returns they get back along with any rebate, a breakdown by dollar amount of what their taxes paid for. (Some states do this with certain taxes – you get a statement as how what you paid was allocated).

Then, being sadly cynical, I doubt that the political class in the US – of any persuasion – really wants the public to be that well informed…

We spend 50% of the world’s total military budget, and yet 31% of people think this amount should be increased while only 30% think it should be decreased. (15% of federal budget)

We are 5% of the world’s population with 25% of the world’s wealth and the only budget category people can agree should be cut is our aid to the world’s poor. (1.5% of federal budget)

People think that real democracy means being able to vote for lower taxes and more services. How’s that working out for ya, California? The Golden State is showing us the way as usual.

Note, too, that people are in favor of cutting the deficit but not paying down the national debt. When the deficit approached zero not so long ago in the year 2000 ( was it just a dream or did it really happen?) our tax hating democracy declared that the government had no business taking more of the people’s money than it needed.

As noted by David Frum and others when you look at the Republican vs Dem results you can see where the problems are.

YouGov asked: “Which of the following would you support as ways to reduce the nation’s budget deficit?” They altered the rules of polling slightly, however, to deny respondents a “don’t know” answer. Respondents had to answer something, either yes or no.
Denied the “don’t know” exit, Democrats favored higher taxes on the wealthy, 77.2%, and cuts in military spending, 46%. Democrats intensely opposed cuts in Medicare and Social Security, only about 5% in favor of either. Just 14% of Democrat answered “none of the above.”
Republicans were a very different story. Unsurprisingly, many fewer Republicans supported tax increases on the wealthy (27.1%) and cuts in military spending (15.5%). Yet when denied the “don’t know” exit, Republicans were scarcely more accepting of cuts to Medicare or Social Security than Democrats, only 13.5% and 15.% approving, respectively. A majority of Republicans, 53.3%, answered “none of the above”—no changes to taxes, defense, or entitlements.

* First off, the entire premise of addressing the federal deficit via “cutting spending” is moot, as you cannot get anywhere even close to reducing the federal deficit by cutting spending, as the root cause of the federal deficits & debt is lack of revenue.

* Second, “decreasing” Social Security would not lower the federal deficit, as:

A) Social Security is not contributing to the federal deficit

B) Any reduction in Social Security would not reduce the federal deficit, as per federal statute, Social Security monies can only be spent for Social Security.

* Third, in a National Journal poll, about 70% of Americans hold the view that our federal deficits & debt are as a result of the undertaxation of the wealthy and excessive defense spending:

“the survey found Americans unconvinced that safety-net programs represent a major source of the deficit problem. When asked to identify the biggest reason the federal government faces large deficits for the coming years, just 3 percent of those surveyed said it was because of ‘too much government spending on programs for the elderly’; only 14 percent said the principal reason was ‘too much government spending on programs for poor people’. Those explanations were dwarfed by the 24 percent who attributed the deficits primarily to excessive defense spending, and the 46 percent plurality who said their principal cause was that ‘wealthy Americans don’t pay enough in taxes’.“

Not now, but inevitably. Eventually SS outflows will exceed inflows, and then the SS administration will begin to withdraw funds from the special treasury bonds it holds. Either the Federal government will have to raise revenues to cover that, or more likely, will start rolling them over as general issue T-bonds – which will increase yearly deficit.

That fact has allows been there, just another one of those things that we think of happening far enough in the future so we don’t have to think about it, until the truck lights hit us in the face…

40% of us gov spending is funded by borrowing, it is even higher if you don’t include programs funded by payroll taxes. It is hard to believe that increasing taxes or reducing spending can balance the budget.
@secondlook, the SS trust fund was designed to help cover the cost of the retirement of the babyboom generation and as such the bonds will be used for that purpose.

SS was designed to work with about 80-90% of all workers contributing the same amount of their income. because of the cap, we end up with a lot less. consider that in some cases, employees exceed the cap in the 1st month.

and those treasures as far as the rest of the world are no different than the ones they buy. so stiffing them will not go well as the market will see that as a default on loans to the owners of the country. think they might think there loans would be next? of course they would

but as it turns out, back in the 80s they changed SS so that it was over paid by trillions, expecting that it would be needed later. well, its later.
and considering that t-bills are a lot safer than equities or bonds. it works a lot better than our 401ks/iras. which during the collapse of the stock market lead those who are dependent on them, to

Those bonds were supposed to be reserved only for Social Security benefits. That’s why they are called special-issue bonds. Instead, the money was spent on other current expenses over the years. To redeem the bonds, takes new general revenues, the same way we pay for all expenses, like Medicaid.
That’s why there is a cash flow deficit now, not in the future. The cash flow exceeds the cash income, for the interest redeemed takes cash!
You guys seem to think Treasury bonds = cash. Or as, Bruce Webb, on Angry Bear declared “Treasuries are better than cash, because they pay interest!”
Don Levit

When $100 billion of nonmarketable Treasuries is redeemed from the SSTF, $100 billion of marketable Treasuries have to be sold to investors, increasing net indebtedness by $100 billion. That’s real money, not IOUs in a Trust Fund file cabinet.

NO amount of lying will make an honest woman out of the crack ho named Social Security.

Those bonds were supposed to be reserved only for Social Security benefits. That’s why they are called special-issue bonds.

Actually, they are called special issue bonds because of their unique nature – only the SS Administration can buy them. and there is no secondary market for them; i.e. the SSA can’t sell them to a third party. It was understood from the beginning that the proceeds from those bonds would be used by the Federal government. It wouldn’t make financial or fiscal sense to hold trillions of dollars in some electronic bank vault. When it came time to redeem them, the government would pay out via general revenue – just like any bond issue, they are a claim on the stream of future earnings.

Keep in mind that while the SS trust fund has approximately $2.7 trillion, that amount would be redeemed over 20-25 years assuming withdrawals started now. Say, about $100 billion per year on average (the fund is expected to peak at about 3.1 trillion). In the context of the total Federal budget, a significant, but not-overwhelming amount.

The critical issue is what happens when the funds are exhausted in the mid-2030′s. A shortfall of about 25% in revenues available for payout. If the government decides to continue full payments, then the amount needed will more than double. However, again, while very significant, not unmanageable.

Still, to say that SS won’t an added expense for the Federal budget going forward is clearly wrong.

It is almost funny to see folks arguing about Social Security, a program that is driving straight towards a cliff some 50 or so years in the distance, especially when simply veering a bit off course by raising the payroll limit above the $106,800 cap would solve the problem for a bit longer. (Those of you who might want to plan more than 50 years in advance should go back and read some financial projections from A.D. 2000)

The biggest problem is Medicare and all of the other medical costs our government bears on every level. Will the ACA be the first baby step in the right direction? That would be an argument worth having, if there was any hope clarity on the subject.

Second Look says only the SSA can buy the bonds – that’s why they are called special-issue bonds.
Let me understand, here. Only the SSA can buy them, but the bonds can be loaned to the Treasury, and then the Treasury can use those same dollars to pay for current expenses.
And, the loan need not be paid back, even the interest, until the cash flow outgo exceeds the cash flow income.
If SS is not contributing to the deficit, what do you call redeeming the interest to pay beneficiaries due to the cash flow shortage? It is either redeemed with general revenues, or redeemed with debt, both situations increasing the debt held by the public.
It is true that intragovernmental debt is also reduced, so the total debt remains the same.
But more of that debt is publicly held debt, which is considered superior to intragovernmental debt.
Intragovernmental debt (the various trust funds that have lent “money” to the Treasury) was a convenient way of postponing the increase of debt held by the public. First it went to intragovernmental debt, then it went to debt held by the public, all the while keeping total debt the same.
What a scam, sham, shame!
Don Levit

Wow, 81% of Americans have no clue, even after the last credit bubble catastrophe, about the looming likely unintended consequences of current higher education policy (global markets distorting over-subsidization).

If true, this data point convinces me that we are only a few years out from the next trillion-dollar catastrophic shoe dropping.

I suggest you include physical stores of gold, fuel, medicine, water, food, and ammunition in your asset allocation going forward, to prepare for the time that an entire generation realizes that it has been conned into a lifetime of undischargeable debt and payments in return for unreturnable and rendered-worthless credentials issued by disgraced, collapsed and bankrupt institutions.

SS isn’t contributing as much to the deficit as the 14-15% revenue to GDP that the Fed’s have now, the historical average is 20-21.
and so far, there isn’t any investment as save as T-bills. no equity. no bonds. no gold. nothing

I agree that it is a shame when people count federal government debt as only the publicly held debt. Clearly the intra-governmental debt to trust funds should be counted into the total. One particularly shameful scam is done by those who use total debt when one party is in power and only the publicly held debt when the other party is in power. However, the numbers are available so the shame is not just on those who are dishonest in reporting the “national debt” but also on those who are stupid enough to fall for that scam and believe them. The trust fund bonds are like any other bonds that government could decide to default and not pay them – although few think that would ever happen. However, there are lots of political games to be played with the budgets and deficits and debt numbers as including or excluding social security/medicare – expenses and trust funds – can tilt perceptions and feed specific political agendas that cannot stand on their own.

The actuaries say that Social Security is solvent through 2085, and they only do 75-year forecasts.

To quote from the official SSA report:

Social Security’s expenditures exceeded non-interest income in 2010 and 2011, the first such occurrences since 1983, and the Trustees estimate that these expenditures will remain greater than non-interest income throughout the 75-year projection period. The deficit of non-interest income relative to expenditures was about $49 billion in 2010 and $45 billion in 2011, and the Trustees project that it will average about $66 billion between 2012 and 2018 before rising steeply as the economy slows after the recovery is complete and the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers. Redemption of trust fund assets from the General Fund of the Treasury will provide the resources needed to offset the annual cash-flow deficits. Since these redemptions will be less than interest earnings through 2020, nominal trust fund balances will continue to grow. The trust fund ratio, which indicates the number of years of program cost that could be financed solely with current trust fund reserves, peaked in 2008, declined through 2011, and is expected to decline further in future years. After 2020, Treasury will redeem trust fund assets in amounts that exceed interest earnings until exhaustion of trust fund reserves in 2033, three years earlier than projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2086.

(My italics)

You’re confusing the ability to keep making payments at all – which is the 2086 estimate (which is only pro forma, given the 75 year limit, in reality, the ability is indefinite as long as SS revenue is collected), and the ability to pay out the full benefits as scheduled.

Joe Friday wrote:
“The trust fund invests in Treasuries, by Federal statute.”
That is correct, according to the statute, but it is not how the financial dynamics actually work.
You make it sound like the investment part has no associated liability, thus making it a “wash.”
From a paper entitled Fiscal Year 2013 Analytical Perspectives, Budget of the U.S. Government:
Page 69: “While such issuance provides the account with assets – a binding claim against the Treasury – those assets are fully offset by the increased liability of the Treasury to pay the claims,which will ultimately be covered by the collection of revenues or by borrowing.”http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/spec.pdf.

That is correct, but the actual financial dynamics reveal the investment part has an offsetting liability, resulting in a “wash.”
From a paper entitled Fiscal Year 2013 Analytical Perspectives, Budget of the U.S. Government:”
Page 69 “While such issuance provides the account with assets – a binding claim against the Treasury – those assets are fully offset by the increased liability of the Treasury to pay the claims, which will ultimately be covered by the collection of revenues or by borrowing.”http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/spec.pdf.
Don Levit

Joe Friday wrote:
The interest is paid just as with any other investor in Treasuries.
Correct. And, the way the interest is paid is that it is credited with additional debt, as opposed to interest as we know it in the private sector. It has no immediate effect on the budget, while at the same time, this interest (and principal) is used immediately to pay for current expenses and lower the deficits.
That is why when the interest is redeemed, as it was the last couple of years as Second Look adroitly pointed out, it is paid with general revenues, this increasing the debt of non-interest income.
If it was “real” interest, as in the private sector, it would simply be liquidated, beacuse it would represent a pre-funded, intact investment.

Joe Friday wrote;
A Social Security trust fund bond is the most privileged of Treasury securities.
According to the GAO, it is the least privileged of 4 levels of obligations, representing an implicit promise.
The highest level of obligation is debt held by the public, an explicit liability.
See a paper entitled “Federal Debt, Answers to frequently Asked Questions, An Update:’
Pages 65-66.http://www.gao.gov/new.items/d04485sp.pdf.
Don Levit

“You’re confusing the ability to keep making payments at all – which is the 2086 estimate (which is only pro forma, given the 75 year limit, in reality, the ability is indefinite as long as SS revenue is collected), and the ability to pay out the full benefits as scheduled.”

“That is correct, according to the statute, but it is not how the financial dynamics actually work.”

So you’re claiming they’re NOT complying with the federal statute ?

“From a paper entitled Fiscal Year 2013 Analytical Perspectives, Budget of the U.S. Government: Page 69: ‘While such issuance provides the account with assets – a binding claim against the Treasury – those assets are fully offset by the increased liability of the Treasury to pay the claims, which will ultimately be covered by the collection of revenues or by borrowing’.”

Exactly as ALL issuances of and investments in bonds work.

“Correct. And, the way the interest is paid is that it is credited with additional debt, as opposed to interest as we know it in the private sector.”

It works the same as with any other bond.

“According to the GAO, it is the least privileged of 4 levels of obligations, representing an implicit promise. The highest level of obligation is debt held by the public, an explicit liability.”

They must not have read the face of a Social Security Trust Fund security.

“That is correct, according to the statute, but it is not how the financial dynamics actually work.”

So you’re claiming they’re not complying with the federal statute ?

“From a paper entitled Fiscal Year 2013 Analytical Perspectives, Budget of the U.S. Government: Page 69: ‘While such issuance provides the account with assets – a binding claim against the Treasury – those assets are fully offset by the increased liability of the Treasury to pay the claims, which will ultimately be covered by the collection of revenues or by borrowing’.”

Exactly as ALL issuances of and investments in bonds work.

“Correct. And, the way the interest is paid is that it is credited with additional debt, as opposed to interest as we know it in the private sector.”

It works the same as with any other bond.

“According to the GAO, it is the least privileged of 4 levels of obligations, representing an implicit promise. The highest level of obligation is debt held by the public, an explicit liability.”

They must not have read the face of a Social Security Trust Fund security.

i) Fulfill all social security (SS) obligations and raise taxes
ii) Fulfill all SS obligations and cut other services
iii) Find some sort of compromise that makes everyone unhappy but still gets me re-elected
iv) Borrow enough money to fulfill all SS obligations while not cutting spending or raising taxes (this is the inflation option)

Which way do you think they’ll go? Bear in mind, they have to do one of those things starting last year because the SS system (Ponzi scheme) is now dipping into the IOUs.

In the case of i) which taxes will be raised in the case of ii) which services will be cut and in the case of iii) how likely is anyone over 65with other income in excess of $40k likely to receive any SS money? In the case of iv) how likely are working people to elect congress critters who will COLA SS benefits? And what happens to retired government workers who never paid into the SS trust fund because of their federal pensions?

You strike me as a retired person who might not depend on SS, but would miss it if it were gone, whistling past the graveyard.

“Bear in mind, they have to do one of those things starting last year”

False.

“because the SS system (Ponzi scheme) is now dipping into the IOUs.”

Social Security is not a “Ponzi scheme” and the trust fund holds no “IOUs“. As I posted upthread, in 14 of the past 75 years, including 1975 through 1983, Social Security paid out more in benefits than the government collected in payroll taxes. That’s how it works.

“And what happens to retired government workers who never paid into the SS trust fund because of their federal pensions?”

As of 1984, all federal employees, including Senators and members of the House, pay into and are covered by Social Security.

“You strike me as a retired person who might not depend on SS, but would miss it if it were gone, whistling past the graveyard.”

You strike me as someone who is uninformed about Social Security, uninformed about government in general, uninformed about finance, and gullible enough to fall for RightWing propaganda.

I posted your reply twice, once about six hours ago, and again about three hours ago. My guess is they are stuck in the spam filter. If I knew what was triggering it I’d attempt to amend it, but alas I don’t.

$135 billion of old bonds matured this year. This money was rolled over into new bonds with a yield of only 1.375%. The average yield on the maturing securities was 5.64%. The drop in yield on the new securities lowers Social Security’s income by $5.7B annually. Over the fifteen year term of the investments, that comes to a lumpy $86 billion.

BR,
This is one of those mixed blessings situations. Lower yields on the SS T-bonds saves money for the Federal budget, but, on the other hand it means less working capital for SS trust fund over time. Despite the fact that Social Security is included in the unified Federal budget – a policy decision made in 1968, prior SS was “off-budget”; done, I believe, to superficially reduce the size of the Federal deficit – it really should be considered a separate entity.

As for a means test for SS; I don’t think a pure means test would be a good idea. The major selling point of SS is it’s universality. Everyone contributes, everyone gets benefits. Otherwise it would be seen as a welfare tax on the more affluent, and that, as Roosevelt with his great political instincts knew, would eventually be unpopular (conservatives are often very much in favor of means testing, aware that would be the outcome).

A better way, and one that would go far to keeping SS fully funded would be to eliminate the cap on maximum contributions, currently $110,100, but reduce the rate of increase over $100,000. (Presently, the maximum is $2,513 monthly). Yes, that would in effect be a marginal tax on the top 20% that subsidized lower income workers, but still would preserve the general idea of shared costs, shared benefits.
Doing that would probably be the most publicly popular approach, and would add about a decade to the trust funds solvency.

SecondLook – Why don’t we put control of the assets in every town’s banks under control of the townfolk’s majority vote? Why don’t we let the majority of workers in each company simply vote on what to do that Company’s pension money? A: We both know the voters will run off with the money and leave nothing for the future recipients, right?

Now – after watching the congressman stuff money in their pockets on the old ABSCAM tapes, and watching Clinton borrow from the SS fund and claim the federal budget was balanced, isn’t it both predictable and demonstrated that elected politicians can’t be put in control of long term savings institutions? They’ll abscond with the money to win re-election. You want Maxine Waters running your bank? Charlie Rangel running your retirement savings account? A Tax cheat running the treasury now? Well, they are doing so.

The only thing that can control banks and benefits funds are laws and strict fidiciary, not popular, control based on real interest rates from the markets.

You can put all the lipstick on this pig you want, and it’s still a pig. Politicians with both regulatory and benefits commitments will never, ever work. The conflicts of interest are gigantic and unsolvable.

“Excuse my ignorance but could you clarify your view on the forecasts for social security being able to pay out the full benefits as scheduled beyond 2025/30 ?”

I’ll reserve my “view”, let’s deal with the facts.

There are three forecasts at the link I previously provided (Trust Fund Ratios), the ‘Intermediate’, the ‘Low-cost’, and the ‘High-cost’. For reasons that will become self-evident, the ‘High-cost’ forecast can be completely ignored.

The dispute involves the fact that the trustees utilize in their reports, the ‘Intermediate’ forecast, which projects that the trust fund will be exhausted by 2039.

Let’s pause and assume that is what occurs. It would NOT mean that Social Security is insolvent or “broke” as opponents allege. Under that scenario, Social Security could continue paying out about 80% of promised benefits until the peak of the Baby Boomers finished passing through the system like the proverbial pig in a python, then Social Security could resume paying 100% of benefits. I should note that at that time, the 80% monthly benefit would still be higher, in inflation-adjusted dollars, than what current retirees receive, because of the metric used in calculating benefits.

There are numerous problems with the economic assumptions utilized in the ‘Intermediate’ forecast. Just as one example, it assumes a level of economic growth over the 75 years from 2001 to 2076 that is HALF THE RATE this nation experienced over the 75 years from 1925 to 2000. Even over the ten-year span of the Great Depression in the 1930s there was a greater average growth rate than the ridiculous 1.8% plugged into the ‘Intermediate’ forecast, which claims to threaten Social Security with a potential shortfall three decades in our future.

Then there’s the little problem with the track record of the ‘Intermediate’ forecast. In the past it projected:

* the trust fund would be exhausted by 2012. It was wrong and had to be revised and extended.

* the trust fund would be exhausted by 2024. It was wrong and had to be revised and extended.

* the trust fund would be exhausted by 2032. It was wrong and had to be revised and extended.

* the trust fund would be exhausted by 2037. It was wrong and had to be revised and extended.

* the trust fund would be exhausted by 2039. To be continued.

However, the ‘Low-cost’ forecast has YET TO BE WRONG. Of course, that does not guarantee it can never be wrong, only that it has a stellar track record compared to the others.

Each and every one of the Social Security trustees that was appointed by Chimpy Bush held the view that Social Security should be scrapped, privatized, and given to Wall Street to skim commissions from, before they were appointed, and they choose to rely upon the ‘Intermediate’ forecast in their reports to the nation.

As the Church Lady used to say, “How Conveeeeeenient !“.

During the Clinton administration from 1993 to 2000, 15 years were added to the life of the Social Security Trust Fund from the baseline originally forecast by the trustees in 1992, and 24 years were added to the life of the Medicare Trust Fund from the baseline originally forecast by the trustees in 1992. Now some of this was due to efficiencies implemented by the administration, but a whole lot of it was the economic growth and high employment.

As to my “view”, it is that exceeding the 1.8% growth rate should not be a problem in the future, assuming we refrain from implementing the failed RightWing policies that have repeatedly produce inferior results.

Social Security can only meet its obligations by raising taxes on current workers today (or cutting services to current workers today) or running larger budget deficits inevitably leading to high inflation. It will require much bigger tax/spending cuts or budget deficits in the future as the number of retired workers swells. I don’t think that’s controversial or that anyone disagrees with it.

My opinion is that either benefits will be cut for some retirees (the ones who can afford it) or benefits will be cut for all retirees (whether they can afford it or not) or the value of future benefits will be inflated away to the detriment of all retirees. Your opinion is that the government will be able to convert promissory notes into real goods and services in unlimited quantities (use your superior understanding of finance and economics to tell me how the government will be able to do that). Listen to yourself – “They will have no choice but to comply with the federal statute.” You’re trusting the government to keep its promises. I hope you don’t live somewhere cold where you’ll have to choose between home heating oil and Alpo.

“Social Security can only meet its obligations by raising taxes on current workers today (or cutting services to current workers today) or running larger budget deficits inevitably leading to high inflation.”

False on all accounts.

“It will require much bigger tax/spending cuts or budget deficits in the future as the number of retired workers swells. I don’t think that’s controversial or that anyone disagrees with it.”

The Social Security actuaries disagree.

“Your opinion is that the government will be able to convert promissory notes into real goods and services in unlimited quantities (use your superior understanding of finance and economics to tell me how the government will be able to do that).”

I expressed no such “opinion” and the trust fund holds no “promissory notes”.

“Listen to yourself – ‘They will have no choice but to comply with the federal statute.’ You’re trusting the government to keep its promises.”

So which United States Treasury securities are you suggesting the federal government default on ?

“False on all accounts.” – in the immortal words of Monty Python, “An argument isn’t just contradiction.”

“The Social Security actuaries disagree.” The actuaries say there will be plenty of Treasury Bills to meet SS’s obligations. The question is, will there be plenty of adult diapers along with the requisite number of hospital orderlies to hand them out. I’m thinking not.

“I expressed no such “opinion” and the trust fund holds no “promissory notes”.” The SS trust fund, as far as I know, has no adult diapers, no hospital orderlies, no waiters working the blue-hair special shift or any of the other goods and services SS recipients will be wanting over the next 30 years. You seem unwilling to face the reality that there’s no way to get from A (IOUs) to B (enough adult diapers to go around courtesy of Uncle Sam).

“So which United States Treasury securities are you suggesting the federal government default on ?” The ones owed to people with enough money to live without SS checks would be my choice. Since that will be politically unattractive to our Congress critters, I suspect every penny will be paid regardless of need – of course every penny will be worth about 0.6 cents in today’s money and COLAs will be done away with. They’ll probably also do away with the upper limit on SS income and they may even take away pensions from billionaires.

Thanks for handling Joe Friday, Today, howardoark. All that is needed for evil to grow is for good people to remain quiet, and you have not remained quiet. I applaud your honest effort, commitment to avoiding name calling and personal attacks, using facts, and asking him the right questions so he has to repeat his false narratives, and then explain the false stories even further.

I’ve tried debating him before, he just keeps saying the whole thing will work despite the 100% failure of every socialist democracy on earth to control their deficits. Borrowing more and printing more money are direct and inarguable evidence of policy failure. But even that he will deny, he’ll celebrate these behaviors as successes. Unfortunately, the 100M americans that celebrate this failures as successes of liberal policy probably won’t change until the system crashes, but that should not deter us, we have to be setting the stage for the post failure policy decisions. Hopefully we’ll have a Constitutional amendment that mandates the federal government has no powers of benevolence, these powers are returned to the states, and the federal gov’t can only spend money they have in hand or money gathered from bonds sold to only to US citizens.

The good news is you’ve forced him to tell his lies and re-explain his lies over and over, and hopefully a few more sane, reasonable people read what he posted and recognize the scam, the Crime Of the Century, that is going on.

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About Barry Ritholtz

Ritholtz has been observing capital markets with a critical eye for 20 years. With a background in math & sciences and a law school degree, he is not your typical Wall St. persona. He left Law for Finance, working as a trader, researcher and strategist before graduating to asset managementRead More...

Quote of the Day

"The largest Asian central banks have gone on record that they are curbing their purchases of US debt. And they are also diversifying their huge reserves, steadily moving away from the dollar. The risks have simply become too many and too serious." -W. Joseph StroupeEditor, Global Events

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